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Trading the News: U.S. Non-Farm Payrolls (NFP)

Even though the U.S. Non-Farm Payrolls (NFP) are anticipated to increase another 198K in November, another 3.7% print for Average Hourly Earnings may drag on the dollar as it dampens the outlook for growth and inflation.

Signs of limited wage growth may spark a bearish reaction in the greenback as it undermines the Federal Reserve’s scope to further embark on its hiking-cycle, and a batch of lackluster data prints may fuel the recent rebound in EUR/USD as market participants scale back bets for above-neutral interest rates.

Impact that the U.S. NFP report has had on EUR/USD during the previous release

Period

Data Released

Estimate

Actual

Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)

OCT

2018

11/02/2018 12:30:00 GMT

200K

250K

-27

-48

October 2018 U.S. Non-Farm Payrolls (NFP)

EUR/USD 5-Minute Chart

U.S. Non-Farm Payrolls (NFP) increased 250K in October after expanding a revised 118K the month prior, while the Unemployment Rate held steady at 3.7% per annum for the second consecutive month. A deeper look at the report showed an unexpected pickup in the Labor Force Participation Rate, with the figure climbing to 62.9% from 62.7% in September, with Average Hourly Earnings also picking up to 3.1% from 2.8% during the same period.

EUR/USD Daily Chart

Near-term outlook for EUR/USD remains uneventful as it carves a narrowing range, with the Relative Strength Index (RSI) highlighting a similar dynamic as the oscillator appears to be stuck in a wedge/triangle formation.

With that said, EUR/USD remains capped by the 1.1510 (38.2% expansion) region, with the first area of support coming in around 1.1220 (78.6% retracement).

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